A large majority of banks, 87 percent, do not have a not have a formal payments strategy, according to a new American Bankers Association (ABA) first-time payments survey.
The survey of more than 200 banks found that responsibility for setting payments strategy varies greatly among institutions. At many banks (35 percent), the chief financial officer or the chief operating officer is responsible for setting the payments strategy. Only 7 percent have an enterprise-level payments officer and 14 percent have a payments committee.
According to the survey, the greatest impediments banks face to implementing their payments strategies are their reliance on a third-party core system provider, technical integration issues and limited resources. Respondents agreed that the top challenge when competing in payments today is data security and privacy. Identity theft and data breaches are ranked as the highest threat to payments security.
“While we’re concerned that many banks don’t have a formal payments strategy in place, we’re not entirely surprised,” Steve Kenneally, ABA vice president of payments and cybersecurity policy, said. “The point of the survey was to develop a baseline. Now that we know where things stand, we can help identify solutions and get our members to where they need to be.”
Thirty-six percent of respondents characterize their bank’s approach to payments strategy as “fast follower,” while 54 percent said their bank takes a “wait and see” approach. Only 3 percent consider their bank a “first mover/experimenter.”
“The survey results show that community banks have a lot of work to do here,” Christopher McClinton, senior vice president of payments and operations at ABA Endorsed Solutions, said. “The good news is ABA offers payments solutions and opportunities to partner with fintechs to help banks keep up with customer expectations.”
Indeed, 30 percent of respondents indicated that their bank has partnered with a fintech company. The survey also found that more than 40 percent of banks offer same-day payment processing and mobile person-to-person payments. Only a small minority offer e-wallet capabilities.
The survey results were released at the ABA Payments Forum, June 22-23 in Washington, D.C.